Skip to main content

[@alux] The Most Common Ways to Become a Self Made Billionaire

· 5 min read
[@alux] Summarizer
Video Bot

@alux - "The Most Common Ways to Become a Self Made Billionaire"

Link: https://youtu.be/NgPnR7VZHOI

Short Summary​

  • Number One Takeaway: Becoming a self-made billionaire requires resilience, persistence, and strategy, not just luck or inheritance. There are multiple paths one can take, but the common thread is the ability to identify opportunities, take calculated risks, and leverage your assets for growth.

  • Executive Summary: While a significant portion of billionaires are self-made, achieving such wealth requires dedication and a strategic approach. The video outlines six common paths, including starting a high-growth business, owning a scalable company, pioneering new technologies, leveraging fame, and strategic investing, all underpinned by resilience and persistence.

Key Quotes​

Okay, here are 4 quotes extracted from the YouTube video transcript:

  1. "As Donald Trump of all people famously said, 'My father gave me a small loan of a million dollars.' Yeah, small loan. People make fun of him for that line, but if you stop to think about it, turning $1 million into a billion means multiplying it by a thousand. That's still an extraordinary thing to do, and you do have to pay back a loan."
  2. "Fame can make you rich, but leveraging that fame can make you wealthy, a billionaire, if you do it right."
  3. "Starting and owning traditional businesses can get you rich. But if you want to build the largest fortune possible, you do it by riding the wave of new industries before they become mainstream."
  4. "So don't think about these paths as being isolated boxes that you have to choose between. In reality, most billionaires blend them. They might build or own a company, but they also put their money to work. So investing isn't always how you start the journey, but it's almost always how you sustain it."

Detailed Summary​

Here's a detailed summary of the YouTube video transcript, focusing on the key information and arguments presented:

  • Introduction:

    • Forbes states 67% of the world's billionaires are self-made.
    • The video aims to explore the common paths to becoming a self-made billionaire.

  • Inherited Wealth vs. Self-Made:

    • 33% of billionaires inherited their wealth.
    • There are different degrees of inherited wealth:
      • Born into billions (e.g., Walton family and Walmart).
      • Inheriting enough to guarantee becoming a billionaire with compounding interest.
      • Inheriting a substantial amount but still needing to work to scale it (e.g., Donald Trump's "small loan").
    • Even with inherited wealth, the initial wealth was created by someone, often through one of the paths discussed.

  • Six Paths to Becoming a Self-Made Billionaire:

    • 1. Starting a High-Growth Business (Founder's Path):

      • Classic route; exemplified by Howard Schultz and Starbucks.
      • Involves seeing potential, raising capital, expanding, and reinvesting for decades.
      • Ultimate payout is immense but takes time and hard work.
      • High risk of failure, but massive upside.

    • 2. Owning a Business:

      • Having a meaningful stake in a scaling business (not just passive investment).
      • Example: Steve Jobs and Pixar. He had vision and leadership, leveraging other people's talent.
      • Ownership creates leverage and captures the upside.
      • Risky, but high reward if the business thrives.

    • 3. Pioneering New Technology:

      • Path to becoming the richest person alive.
      • History shows the greatest fortunes come from those at the forefront of new technology (e.g., Carnegie, Rockefeller during the industrial revolution; Gates, Ellison in computers; Bezos, Musk now).
      • Involves creating value from something not widely understood.
      • Requires seeing the future of industries like AI, renewable energy, biotech, or space.

    • 4. Fame and Leveraging It:

      • Two routes: ultra-rare megastar (e.g., Taylor Swift) vs. leveraging influence.
      • The common approach is transforming fame into products, businesses, and investments.
      • Examples: Michael Jordan (Nike/Air Jordan), Rihanna (Fenty Beauty), Kanye West (Yeezy).
      • Key is to leverage fame beyond the initial talent that brought fame.

    • 5. Investing (Patience and Compounding):

      • Slower, quieter path requiring patience.
      • Exemplified by Warren Buffett's "buy good companies and hold" strategy.
      • Relies on the power of compounding returns over decades.
      • Investing is a common trait among billionaires (self-made and otherwise) to sustain and grow wealth.
      • Very few reach Buffett's level by simply buying and holding stocks.

    • 6. Diversified Investments:

      • Spreading capital across various asset classes: real estate, private equity, debt, operating businesses, etc.
      • Example: Kenneth Brian Dart and his diversified portfolio.
      • Reduces risk and allows for exposure to multiple opportunities.
      • Success in one area funds the next, creating a robust and self-sustaining portfolio.

  • Conclusion:

    • Every billionaire's story is unique, but common threads are resilience, persistence, and strategy.
    • Billionaires often blend multiple paths rather than sticking to just one.
    • Learning from these paths can help build individual success.